Stock Broker Charges for buying and selling shares in India

Brokers are individuals or firms who act as an agent between the investors and securities exchange and facilitate the buying and selling of shares, derivatives (Futures and options) and other financial instruments. They are compensated by way of various charges, fees and taxes as explained below:

1.Brokerage Charge in Share Market

Brokerage charge a brokerage fee for the services they provide and each broker has their own brokerage model which they follow for the same. 

In India, there are three types of brokerage plans available:

• Brokerage in percentage of trading volume
• Flat per trade brokerage

Flat rate charged irrespective of the volume of trading

• Monthly unlimited trading plan: 

Fixed Brokerage Charges monthly charge to trade in securities

Full-Service Broker: These brokers provide an all-inclusive brokerage service relating to trading and also advisory, research, management of sales and assets, investment banking, etc. They usually charge a percentage of trading volume. Brokerage charges could range from  0.01% to 0.5% on delivery and intra day trading.

Discount Brokers: These brokers provide investors with a trading platform and charge commission for their service. They do not provide other services like advisory and research. They usually offer flat per trade brokerage plan or monthly unlimited trading plan but it depends on each broker. The charges range from a flat fee of Rs 10 to Rs 20 per trade on delivery and intra day trading.

2.Transaction Tax on Buying and Selling of Shares:

• Transaction tax is also known as exchange turnover tax as it is charged by the stock exchanges such as NSE, BSE, MCX on both sides of trading.
• It is the largest part of the cost of trading with discount stock brokers .
• It is shown as an addition of exchange turnover charges and clearing charges.
• NSE & BSE charge a transaction fee of 0.00325% & 0.00275% of the total amount.

3. Securities Transaction Tax (STT):

• This is a charge on the value of securities being traded through a stock exchange. 
• It is the second largest charge involved in trading stocks after Brokerage charges.
• It is charged on only the sell side for intra day trading(0.025%) and derivatives(futures and options), 0.01% on futures and 0.017% (on premium) on Options.
• It is charged on both sides for delivery trade in equity (0.1% on both buy and sell).
• It is not charged for bonds, mutual funds and currency.

4.Stamp Duty Stock Broker Charges :

• Earlier stamp duty was levied at different rates on stock trading (on both buying and selling) as decided by each state as per Stamp Duty Act,1899.
• With effect from 1st July 2020, stamp rates are charged uniformly irrespective of the states and they are only levied on the buy side.
• The rates are given as follows:

5.Goods & Service Tax on Stock Broker Charges:

This is a tax levied by the government of India which is 18% of transaction and brokerage charges.

6.SEBI Stock Broker Charges:

Securities and exchange board of India is the regulatory body for securities and commodity market in India. SEBI charges or SEBI turnover charges is equal to Rs 10 per crore of total turnover and its charged on both buying and selling of securities except on debt securities.

7.Depository Participant Charges:

The stock depositories of India, Central Depository Services Limited (CDSL) and National Depository Services Limited (NDSL) charge a fixed sum from the depository participant which in turn is charged from the customers.

8.Capital Gains Tax :

Majorly, there are two types of capital gains tax:

• Short term capital gains tax:

If the holding period is less than one year then a flat 15% of profit is charged as short term capital gains tax.

• Long term capital gains tax:

If the holding period exceeds one year then it is termed as long term holding and tax is levied as 10% of the gains if it exceeds Rs 1 lakh.

Conclusion

These are the major charges which must be accounted for bys the investors before investing in the stock market to make informed and profitable decisions. One must contact a financial advisor who can provide appropriate knowledge on how to gain benefits from the market.